Sprout Social Gets $10 Million From NEA

Sprout Social, which helps businesses manage their interactions with customers on social networks, is getting a $10 million investment from venture capital firm NEA, valuing the company at $50 million, according to founder and Chief Executive Justyn Howard.

Sprout Social provides businesses with a dashboard that lets them track their online reputations with users of social networking sites like Facebook, Twitter, Yelp and LinkedIn, and recently added reporting functionality for location-sharing networks Foursquare and Gowalla. For example, businesses using Sprout Social can receive alerts if a customer “checks in” at their place of business, and can send a tailored response, welcome, or reward to the visitor through Twitter.

Sprout Social

Of course, the company is dependent on the wave of popularity enjoyed by those social media sites, but Howard says this reliance doesn’t worry him. Consumers are “fairly cemented into social channels,” he said, so while businesses are still struggling with monetizing this trend effectively, “we still fundamentally need to talk to our customers… and [social networks are] where the customers are readily accessible.”

Sprout Social also provides guidance, for instance by preventing businesses from engaging in behavior likely to turn off potential customers, such as scheduling messages (known to some as “spam”) unless it has first engaged in “authentic” conversations with their contacts. “It’s not the most popular thing” among his customers “but we think in the long run it’s going to help our customers be more successful.”

Sprout Social has grown from four employees in second quarter of 2010 to 20 people today. The company will use the capital influx to increase head count for customer acquisition and engineering positions, said Howard.